Moat in £100m bid to buy more homes

Moat in £100m bid to buy more homes

Moat Housing Group plans to spend up to £100 million buying thousands of homes from other landlords.

The 20,800-home landlord will acquire stock across its core area in south east England.

It does not yet have a target for the number of homes it wants to acquire. Finance director Greg Taylor said Moat is in early stage talks with several landlords, each selling between 100 and 1,000 homes, but does not yet know whether these deals will happen.

‘We are looking at stock purchases from other landlords where it fits into our core areas so we can improve efficiency,’ he added. Mr Taylor said buying more homes in the housing group’s core areas in the south east of England would enable the organisation to create scale, reducing management costs per unit.

Moat will raise £100 million, possibly from the bond markets, to finance the acquisitions and part-fund its development programme. Moody’s awarded it a credit rating of AA2 in May, the third highest rating, signalling it is considered a very low credit risk, but more susceptible to long-term risk than top-rated borrowers. (Inside Housing, 11 May).

Moat’s turnover fell by almost £11 million, but its post-tax surplus rose by a third to £12.9 million, the group’s accounts, published last week, showed (see table). Its operating surplus remained flat at £20.1 million. Operating costs fell from £71 million to £60 million and the number of full-time staff fell from 419 to 376. Within this, social housing management costs dropped by more than £1 million.

Mr Taylor said: ‘For the last 18 months we have been looking at our overheads and management costs closely.’

The group decided to bring forward £3 million of spending on kitchens and bathrooms which contributed to increased social housing major repairs costs of nearly £5 million. ‘We knew we were having a good year so we brought forward the repairs to get ahead of the game,’ he added.

The number of shared ownership homes Moat sold fell from 372 to 175, but profits on the sales rose £652,000 because the group made a bigger margin on each sale than the previous year. Sales costs fell by £21.9 million to £8.4 million. Mr Taylor said easier market conditions in 2010/11 compared with the previous year meant the group could spend less on marketing each unit and homes sold more quickly.

The group’s stock of unsold shared ownership homes rose to 2,039 from 1,440 last year, but Mr Taylor said this was partly due to schemes completing close to the end of the financial year and so they had not had time to be sold before the accounts were done.

In numbers: Moat’s finances

  2011 2010
Turnover £75.3m £85.8m
Operating costs £60m £71m
Surplus £12.9m £9.7m
Current assets £22.4m £19.4m